REAL ESTATE- The School Employees Retirement System of Ohio has made a $30m (€24.9m) investment into the Fillmore East Fund. This decision was made by the pension fund at its board meeting in the middle of March.
This investment falls in line with the pension fund’s real estate investment strategy for fiscal year 2006. This is to focus on commingled fund investments and reduce its exposure to separate accounts.
The fund now has total assets of $9.8bn. Its targeted allocation for real estate is 10%. It has the option of going as high as 15%. It has now committed to investments totaling 10.5%.
The manager of Fillmore East is Fillmore Capital Partners. Its president is Ron Silva. He said, “Ohio School Employees is a new client for us. We had placed a cold call to them and that’s how our relationship began. I was the person who made the presentation at the board concerning our commingled fund.”
Ohio School Employees will be one of the last investors in the fund. The total equity raise to this point is $450m. There will be one more investor in the fund. This is Ohio Public Employees Retirement System. It will make a decision soon. The investment will be in the range of $50- $75m.
The investment strategy for Fillmore East is to make mezzanine, preferred equity and equity transactions. Many of the deals for the fund are investing in hospitality and health care industries.
One of its most recent transactions involved participating in taking Beverly Enterprises from a public company to a private entity. This was a $2.2bn deal. The amount that Fillmore East put into the deal was $100m.
Beverly Enterprises is a leading player in the long-term health care industry. It owns primary nursing homes. The assets that it controls are 365 properties in 28 states spread out across the US.
Fillmore Capital has an interest in finding deals all over the country. It would like to select transactions that produce a net IRR for investors in the range of 14% to 15%. This yield is assuming a nine-year holding period.